In studying the humoral regulation of lymphohematopoietic cell growth and differentiation as well as mature cell function, we have found that transforming growth factor Beta has potent bifunctional effects. TGF Beta 1 and TGF Beta 2 are equipotent selective inhibitors of hematopoiesis that halt the growth of early human and murine progenitors, but not more differentiated progenitors. Using partially purified murine hematopoietic stem cells in single cell assays with several cytokines, it was shown that TGF Beta acted directly on the cells to block growth. In contrast, addition of TGF Beta to GM-CSF stimulated bone marrow cells greatly augmented growth, leading predominantly to an increase in granulocytes, and was also shown to have a direct effect in single cell assays. Both in vivo and in vitro experiments with TGF Beta show that the hematopoietic stem cells are reversibly prevented from entering the cell cycle. These growth modulatory effects function at, at least, two levels: 1) trans-down modulation of the cell surface receptors for positive regulatory signals and/or 2) interfering with post-receptor signalling of these molecules by decreasing cytokine mediated phosphorylation or by inhibiting specific gene expression. Leukemic cell lines could be either sensitive or insensitive to TGF Beta mediated growth inhibition. Growth of neoplastic B lymphocytes can occur by escaping from a TGF Beta mediated autocrine inhibitory loop. Activation signals (e.g. phorbol esters) can inhibit tumor cell growth by stimulation of active TGF Beta production and induction of cell surface expression of functional TGF Beta receptors. In studying effector cell function by CD3+ and CD3- lymphocytes, it was found that cell mediated cytotoxicity was much more sensitive to TGF Beta mediated inhibition than cell growth and that expression of the IL 2 receptor p55 chain was inhibited by TGF Beta while expression of p75 IL 2 receptor chain was not.